Listings reach record high but net profit slumps
Luxembourg's Stock Exchange is fighting to remain independent as a wave of consolidation among rival exchanges have made the company an obvious takeover target.
One of the emblems of Luxembourg’s financial centre, partly owned by the Luxembourg state, the trading venue stressed at its annual result presentation that it has no appetite to join a bigger group.
"We are continuously having discussions with people because we seem to be doing well," CEO Robert Scharfe told the Luxembourg Times.
"We are an important actor in capital markets and therefore we are an asset that a lot of people would like to see in their portfolio."
But Scharfe said there would be little benefit for the Luxembourg operator which makes most of its money from listings rather than trading - where scale and volume is more important.
"For us, (if we lost) our independence we (would) have problems seeing where would be the economies of scale? What is it we would gain?" he said.
Amsterdam-based Euronext has already snapped up Dublin’s stock exchange and is currently vying with Nasdaq to buy the Oslo Stock Exchange.
The London Stock Exchange and Deustche Börse were also involved in a disastrous merger attempt in 2017, which would have created Europe’s biggest stock exchange.
The deal fell apart under scrutiny from the European Commission and after Britain’s vote to leave the European Union complicated the plans.
Frank Wagener, president of the board, told journalists the board believed the Luxembourg Stock Exchange’s independence was "paramount".
"We are not changing our strategy one iota," he said. "We are not for sale".
The Luxembourg exchange said last year listings reached a record-high of 11,235, up slightly by 1% on 2017, for total issuance of €1.52 trillion.
Its operational revenues were steady, up 1.3% on the previous year to reach €48.2 million, but net profit slumped 8.3% to €11.2 million. It will nevertheless pay a dividend of €51 per share.
Scharfe said lower values of its investment portfolio had dragged profit down.
The Luxembourg Green Exchange, the largest listing venue for green finance in Europe, continued to expand in 2018 reaching €36.8 billion of issuance.
The company also reinforced its ties with China, listing more dim sum bonds and striking a deal for access to the Chinese intrabank lending market.
Brexit also had a "limited impact", leading some companies to list shares or dual-list in Luxembourg, Scharfe said, due to the uncertainty.
"We have seen isolated action from some issuers who simply have this uncertainty and have taken a decision," he said.
"I am convinced the day the terms of Brexit are clear we will see movements in the market."
https://luxtimes.lu/economics/37082-luxembourg-stock-exchange-strives-to-remain-independent